National bank of Pakistan

Acknowledgements

First of all I am thankful to Almighty Allah who gave me knowledge and

power to make me able to complete my internship successfully.

I am also thankful to Institute of Management Sciences Bahauddin Zakariya

University Multan who provide me this opportunity to have an experience in a
reputed organization and groom myself for the future professional responsibilities.

I shall also like to wish to acknowledge and show my deep gratitude to our respective
teacher, Dr. Nauman Abbasi, for his consistence, advice and support given during the
writing up of this report.

I offer my heartiest tribute and cordial gratitude to present my thanks to Mr. Sohail
Rasool Operation Manger of NBP Main Branch Multan and Mr. Sajid Credit Incharge
of NBP Main Br. Multan for their kind support and cooperation in this project.

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Preface

At the master level, the students, after the completion of their studies have to
face a lot of difficulties and problems as they are entering a completely new phase of
their lives that is the practical field in simple, due the vast difference between
theoretical and practical work. To avoid such discrepancies the students of MBA are
given the opportunity to not only visit various business organizations but also to work
there and gain first hand experience at the process and method in which these
different organizations function.

The purpose of the practical training is to increase the know how of the
students regarding the virtual jobs of different business organizations of the country.
It is also included in the charter of Project Report that the students go through actual
systems of the management which prevail in the various business organizations. It is
also necessary to enhance their managerial capabilities include and comprehensive
manner in respect of various managerial opportunities.

The preparation and submission of this Project Report is essential for all the
students of MBA. This Report on National Bank of Pakistan covers more or less all
the aspects regarding the structural organization, working system, overall growth of
the company considering the fact that the report is meant to give an overview of the
National Bank of Pakistan & its major operations and strategies.

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National bank of Pakistan

National Bank of Pakistan

Historical Background :
The normal procedure of establishing a banking company under the
Companies Law was set aside and the Bank was established through the promulgation
of an Ordinance due to the crisis situation that had developed with regard to financing
of jute Trade. The Bank commenced its operations from November 20, 1949 at six
important jute centers in East Pakistan and directed its resources in financing of jute
crop. The Bank’s Karachi and Lahore offices were subsequently opened in December
1949.

State bank of Pakistan after its formation demanded from the Indian Reserve
Bank the assets against the Indian currency retired from Pakistan territory.
Government of India refused to hand over the assets worth about five hundred million
rupees. The dispute is still unsettled and these assets are still not delivered to Pakistan.
Until June 1950, the Bank was engaged exclusively on jute operation. Thereafter, it
was felt that it could expand its business to include other commodities as well. Bank
took a
big stride in 1952, when it replaced the Imperial Bank of India, as an agent of State
Bank of Pakistan.

With the passage of time its functioning diversified as they take over the
function of different institution with the passage of time like in past they took over the
function of Imperial bank of India and now of NDFC (National Development Finance
Corporation).

It is working as the agent of the state bank of Pakistan and performs its
functions wherever state bank of Pakistan is not present.
In 2004 national bank celebrated its golden jubilee during the last fifty years
bank has made substantial strides in the financial services industry in Pakistan and it
remains the largest financial institution in Pakistan.
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Vision
"To be recognized as a leader and a brand synonymous with trust, highest standards of
service quality, international best practices and social responsibility."

Mission Statement

“ To be recognized in the market place by Institutionalizing a merit & performance

culture, Creating a powerful & distinctive brand identity, Achieving top-tier financial
performance, and Adopting & living out our values".

Goals
"To enhance profitability and maximization of NBP share through increasing
leverage of existing customer base and diversified range of products."
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DEPARTMENTS
Departments in National Bank Main Branch Multan
Following departments are working in NBP main branch:

• Foreign Exchange
• Deposits
• Credit and Advances
• Bills & Remittances
• Accounts Opening
• Clearing Section
• Government Section
• Corporate

"What activities I have performed and what I have learned in these departments
are briefly explained below."

FOREIGN EXCHANGE DEPARTMENT:

Foreign exchange is an important department in bank system. In the
foreign exchange department all the operations of the bank are done in the same way
as in all other departments of the bank this department also involve in deposits,
remittances and advances but the difference with other department that the foreign

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exchange department deals in foreign currency rather then in local currency. For
opening of account in foreign exchange the minimum balance required is $1000.This
department is just like Cash Department in local currency. In this department, the
dealing is made in foreign currency.

In National Bank of Pakistan, four currency accounts are available:

• US Dollar
• Pound Sterling
• Japanese Yen
• Euro

FUNCTIONS:

The department performs the following functions:

 Account opening
 Account closing
 Inward/outward remittance
 Issuance of traveler cheques

ACCOUNT OPENING:

Terms and conditions:

Account opening requires two things:

1) National ID card of the customer and introducer

2) Introducer

CUSTOMER:

Customer is the person who comes with the purpose of opening the account.
INTRODUCER:

Introducer is a person having the account in same branch and gives guarantee
about the customer. If the introducer is not proper than state bank charges Rs. 5000/-
per head from that employee of the bank who has opened the account of the customer
on the request of the introducer.

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Procedure of Account Opening and Depositing Foreign

Exchange:
First of all, the customer is required to fill an application form. Then he
attaches the photocopy of his identity card and fills the signatory cards. Then he is
allotted an account number by entering in the account opening register. Now he fills
the pay-in slip and deposits money on the counter.

Following things are needed for opening of account:

 Account opening form

 Signature card
 Letter of kinship
 Letter of thanks
 Issuances of cheque book
Account opening form:

Account opening form consists of:

 Category of account
 Currency
 Title of account
 Account number
 Customer information
 Initial deposit
 Authorized person in case of customer death

Signature Card:

The signature card included the name and specimen signature of the customer.

Letter of kinship:

In the latter of kinship the customer authorized the bank to pay the
proceedings of his/her PLS/Current foreign currency account to the related person by
describing the relationship of the person with the customer after the death of the
customer.

Letter of Thanks:

Letter of thanks is the latter issued by the bank to the customer for two purposes :

1st purpose is to say thanks to the customer for opening the account in their
bank

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2nd purpose is to confirm the address provided by the customer while opening
the account.

Issuance of cheque Book:

Cheque book is issued to the customer after sending the letter of thanks when
the customer comes with the latter of thanks and requests for the issuance of the
cheque book. A cheque book (usually having 25 leaves) is issued to the customer.

Closing of Account:

The customer can close the account. The customer is required to submit an
application for closing the account. The account is closed out and his balance is paid
to him after deducting the closing charges, i.e. $ 20 and the application is filed in
account closing file.
There are many reasons for closing of account:

 Account holder Owen request

 Death of account holder
 Closing of account due to the bad manners of account holder
Inward/Outward Remittances:
The remittances are of following types:

 Foreign Telegraphic Transfer (FTT)

 Foreign Demand Draft (FDD)
 Foreign mail transfer(FMT)
 SWIFT
 Western union money transfer(WUMT)

Foreign Telegraphic Transfer:

This is telegraphic transfer just like ordinary local currency TT, but this is
foreign currency.
NBP has its correspondent bank in New York. NBP gives credit to main office
Karachi, which gives credit to NPB New York, which gives credit to NPB, which
ultimately gives credit to required destined bank and account number.

Mode of payment can be cash or by debiting the account. When FTT is received
from abroad, NBP debits Main Office Karachi account and gives credit to the account
of beneficiary.

Foreign Demand Draft:

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Foreign Demand draft is also known as FDD. A person who wishes to

remit money to someone in another place may if he does not send his own cheque,
obtain from his bank a draft on demand payable to the person who is to be paid the
money. It may be drawn upon one of the banker’s own branches, or upon some other
bank where exists for draft to be drawn. Whenever a draft is drawn own advice is
dispatches the same day. Advising the bank or branch as the case may be, of the
particular of the draft of that banker on whom it is drawn may recognize the draft was
it is presented.

When a person requires a draft, he should be asked to complete the

prescribed application form in which he should state the amount of the draft, the name
of the payee and the place of payment. The bank charges commission Rs. 500 flat,
excise duty Rs. 8. for charges.

After receipt of money, the entry is passed in FDD register and a number
is allotted to FDD. Then FDD is prepared and given to the customer. After this, they
give credit to Main Office Karachi, and advice is also sent to Karachi.

Foreign Mail Transfer:

These are also known as FMT. Transfer by mail of an account of currency to

another country. The Remitter sign auroras requesting the banker to transfer the
amount by mail, giving the name and address of the payee.

Foreign Bills for Collection:

Under this head, all foreign cheques are included whose payments are to be
received from abroad.
When a customer asks the bank for collection, the cheque is sent to the bank
on which is drawn. Then on the receipt of advice from abroad, the customer’s
account is credited in the bank and debit the Main Office Karachi account.

Traveler Cheques:
Issuance of Traveler Cheques:

NBP issues the traveler cheques to those people who want to travel abroad.
These are not drawn on any specified bank or banks, but payable at practically all
banks throughout the world and guaranteed by some well-known institution. National
bank purchases the traveler cheques from American Express Bank and makes the
payment after selling it to the client.

Procedure:

A customer is required to submit the following things:

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 Valid passport with visa

 Return ticket

Currency must be deposited in Pak Rupees. Ticket is endorsed. It is

converted on the selling rate of that day. Traveler cheques are issued. Their limit is
$50 per day for private visit and maximum limit for the year is $2100.

Limit for businessman is $200 per day and maximum limit is $6000. But
approval from Chamber of Commerce & Industry is required and certificate of ticket
issue for which the payment must be made through cheque. Pak rupee currency
account is necessary, and he has to present cheque for the amount to the bank.
Endorsement of the ticket is very essential. Issuing ticket authority should endorse its
stamp on the passport.

SWIFT:
The SWIFT system (Society for Worldwide Inter bank Financial Telecommunication)
has been introduced for speedy services in the area of home remittances.
The system has built-in features of computerized test keys, which eliminates
the manual application of tests that often cause delay in the payment of home
remittances. The SWIFT Center is operational at National Bank of Pakistan with a
universal access number NBP-APKKA.
All NBP overseas branches and overseas correspondents (over 450) are
drawing remittances through SWIFT. In case of transfer of funds the introduction of
S.W.I.F.T., an acronym for Society for Worldwide Inter-bank Financial Transactions,
has made remittances faster and secure. The system works like Internet
communication processes. All the banks in the world are registered for the service,
which have the facility of online computers. Headquarter of S.W.I.F.T. is in Belgium.
The message sent through this way does not require any code tests to confirm its
authenticity.
The sending process is more secure where two officers make the transmission
of the message, one types the content with his code word and the other executes it
with his password. There are different types of codes that are used for the messages
interchanged on the basis of the type of the transaction. Using the NBP network of
branches, you can safely and speedily transfer money for our business and personal
needs.

Swift is a soft wear. It is use for following purposes:

 Financial transactions
 Non-financial transactions
 Linking
 Import & export messages

Different codes are used in swift for different purposes:

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 Letter of credit code is 700

 Remittance code is 100
 Bank to bank transaction code is 202.etc.

Procedure:

When any massage comes through swift 1st its received by head office then
head office authority send that massages to different banks via mail to main branches
of relative banks.

Western Union Money Transfer:

Western union money transfer is a fastest way to receive money worldwide. It

is working in almost 200 countries. Different Government and private organization
are dealing with WUMT.

Govt. organization e.g banks

Private organizations e.g Zarco, Money changer, Dollar East, Master Currency.

Main office of WUMT is situated in Dubai, it is a procedure of counter

payment.

Procedure of payment:

WUMT just needed identification, no need of a/c, it's a counter payment.

Procedure of payment is that the customer came to specific person who is
dealing with WUMT tell him the:

1) MTC NO

2) Receiver name

 First name
 Middle name
 Last name

3) Sender name

 First name
 Middle name
 Last name

4) Telephone no

5) Photo copy of ID card

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6) Expected amount (10% margin is acceptable)

7) Test question

After if the that related officer feed MTC # (mail transfer control) , it is unique
number not less then 10 digits, receiver name , his/her 1st name and last name, and
sender name to check whether amount is come or not . When all these things are
correct then give a form to the receiver, he/she filled the specific form, after that
officer done his signature and give one copy to customer, other copy send to the cash
counter for payment and the last copy put in file for the purpose of record. Payment is
made only in Pak rupees.

WUMT form:

Its form is divided into three sections:

1st for receiver information, his name, address and telephone number
2nd section for sender, his name, address telephone number
3rd section is for expected amount, MTC number, test question, signature.

There are three copies of form:

 1st for counter payment,
 2nd for customer and
 3rd for branch record.

Deposits
Deposits are important to the bank as a backbone is to the body of a man. They are the lifeblood of the
bank. National Bank of Pakistan and all other commercial banks perform the function of deposit
accepting from the general public by offering suitable rates of interest on them, or on simply a promise
to repay on demand.

OPENING OF ACCOUNT BY AN INDIVIDUAL:

After entering into bank premises the person goes through the following steps for opening an account in
the bank and for becoming a bank customer.

1. An Introduction:

The first important step to take place in bank is to get satisfactory introduction of the person,

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who wants to become bank’s customer.

In N.B.P (Main Br. Multan) the account opening officer takes great care of this step and gets
introduced with the person himself. His main intention is to determine the prospective
customer’s integrity, respectability, occupation, why he opening account in this branch and
nature of business he is doing at the time of opening an account.

2. Account Opening Form and Specimen Signature Card:

Now the person is provided with an application form known as Account Opening Form.

This form contains: -

i. Title of account.

ii. Nature of account.

iii. Address.

iv. I.D. Card number.

v. Telephone No. (Office and Residence)

vi. Signatures of the applicant.

vii. Amount deposited.

viii. Mother's full name.

ix. Profession.

x. Name of next of Kin.

xi. A Nadra verification is also attached with this form. NBP is online connected with
Nadra office to verify the National Identity Card.

The customer will attach a copy of his and next of kin National Identity Card with the form.

Specimen Signature Card:

Specimen of signatures will be obtained from depositor at the time of opening his account. A specially
designed card is used for this purpose; the card must be countersigned by an official of the bank not
below the rank of an officer.

3. Account Opening Register:

Now the name of the customer will be recorded in account opening register, and from here the

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account no. of the customer will be written on (top most corners) account opening form and on
specimen signature card.

4. Issuance of Cheque Book:

The cheque book will ordinarily be issued to all customers desiring to have chequing facility.

Cheque book consists of 10, 25, 50, or 100 leaves depending upon customer requirement.

Customer can withdraw money by signing a cheque.

A special cheque book register is kept to enter the name of the person having cheque book.

After submission of account opening form, this form will be punch in computer and a letter of
thanks will be issued in the address of account holder and will be sent by post. This letter is
issued to confirm the address of account holder. On receiving of letter, account holder come
with letter then his first cheque book is issued. For next cheque book there is normal procedure.

6. Recording into General Ledger:

The concerned officer records the name and amount deposited with the bank in to general
ledger. Separate ledgers are maintained for different types of accounts e.g.

Current Account Ledger

Saving Account Ledger

Fixed Deposit Account Ledger

As and when customer will deposit the money, amount will be credited in general ledger and
the withdrawal will be followed by a debit entry in the ledger.

TYPES OF ACCOUNTS MAINTAINED BY NATIONAL BANK OF PAKISTAN

NATIONAL BANK OF PAKISTAN maintain following types of accounts:

1. Current accounts.

2. Profit and loss sharing account.

3. Fixed deposit account.

CURRENT ACCOUNT

This account is also known as running balance account. Simply we can say “A bank account which may
be used to lodge payments or to withdraw money on demand.”

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Its main purpose is to serve the businessman. Form number F-53 is provided to the person to open the
account. It is a statutory requirement to maintain current account.

Its main features are: -

Minimum amount for opening this account is Rs.500

Any person can open the account with the bank

According to inter banks agreement interest is not paid on current account and zakat will not be
deducted on this account.

Bank act as custodian of money

Over draft facility is provided to the customers

Customer can withdraw money through cheque supplied by bank

PROFIT AND LOSS SHARING ACCOUNT

In general it is also called saving account .To provide interest free banking facilities in Pakistan, this type
of account was introduced in January 1982 after the Islamization of banking.

The main features of this account are: -

Instead of having fixed return in the form of interest the deposited money will be shared in profit
and loss of the bank.

One can open the account by depositing minimum Rs.100

Charges free withdrawal is for Rs. 25000 in a day. 3% service charges will be deducted on the
excusive amount.

There is not any kind of interest is provided on money deposited.

Rate of profit is declared at the close of each half-year.

Main difference between current and profit & loss account is that interest is paid
and zakat is deducted on profit & loss account but in current interest is not paid
and zakat is deducted.

CREDIT AND DVACNECS DEPARTMENT

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Credit:
The most important activity of the bank is the granting of credit to the customers.
NBP provides short term and long terms financing for domestic and international
trade. The policies made by central office of the cash can be amended on the basis of
the rules and regulation, economic risk of each country, board of directors and
committee of the NBP made this type of decisions and informed about these decisions
to the branch managers.
Manager can grant the credit limit to each customer with in the declared limits
approved by the controlling offices. Banks grant credit to the customer for a certain
period of time. The banks provided credit to the customers so that they can purchase
ahead of their liability. By giving these facility to the customer’s large scale
production of commodity can be achieved and economic growth rate can be
increased. The power to sanctioned loans had been delegated for controlling different
offices, according to amount of loan. This department is also called as risk
management group.
The following elements are used for credit selection:
Character:
It is based on the borrower willingness to repay the obligation. The loan officer sees
the family background mode of living, business nature, habits, moral reputation and
etc. before giving the loan.

Capacity:
The ability of borrower to repay the loan when its due. The borrower ability to
repay the loan is assessed by the office so that he will be able to repay the loan in
future.

Functions Capital:

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The officer assesses the capital of the borrower. If assets held by the borrower
are liquid, they can be easily convertible in cash; but if non liquid is used then it is
risky to given loan.

Collateral:
It is collateral security. It may consists of stocks bonds , bill of exchange, bills
of lading, etc. the bank has protect him self from any discrepancy in the future. They
increase the ability of the borrower to obtain the funds from the bank.

Condition:
The economic condition of the borrower is determined. The economic
conditions of the borrower in and out side the country effects the repayment of loan. If
condition is favorable then loan is given otherwise vice versa.

Loans:
Loans provided by the bank are of the following two types.
♦ Funded
♦ Non-funded

Funded:
In fund based bank contributes a large amount of the fund based on clarified as
follows

Types of Loans:
♦ Demand finance
♦ Cash finance
♦ Running finance

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Demand Finance

One time disbursement of the whole amount sanctioned, as the limit for the
credit allows. Any person, individual, group, company, firm and all others can
achieve this mode of financing. The mark-up or interest is calculated on the total
amount disbursed and requires to be paid before the date of final adjustment.
Regarding the amount, limit and period, it depends on the nature of the case in review.
For example gold loan.

Gold loan
This loan is sanction against the security of gold.
Documentation:

♦ BBFS ( borrower's basic fact sheet):

All details of the borrower's like borrower's profile , references, nature of
business/profession, existing limits and status, requested limits, details of payment
schedule etc…
♦ LAF
Application for finance against pledge of gold ornaments. In this document
introduction and verification of the borrower, terms and conditions of the loan and
markup rate is written. This loan is for one year and there is only one installment at
the end of year.
♦ Completion of pre-disbursement formalities of DF(Gold)
♦ Finance facility offer letter:
This is sanction letter of loan given by authorized authority.
♦ Certificate of valuation of Gold ornaments:
This valuation is by schroff, who is contracted with NBP.

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♦ Delivery letter:
Undertaken ofborrower that I have delivered my gold to the bank.
♦ Confirmation certificate:
It is the confirmation by schroff about the weight and value of gold.
♦ Delivery of pledged property:
♦ Gold loan insurance form
♦ CNIC verification
♦ Consumer credit information report:
This is the information of others loan taken by the borrower form other financial
institutions which is send by the state bank on request of NBP.
♦ Promissory note:
♦ Agreement for financing for short/medium/long term loan
markup basis:
This agreement is signed by both parties (bank and borrower)
♦ Letter of pledge :
♦ Guarantee:
This is the guarantee that if in case gold does not recover the amount of loan then
bank can legal action to sale out other property to recover the loan with the
permeation of court.
After this documentation borrower has to pay stamp duty,
withholding tax and insurance fee. Then credit department will make entry in manual
book of account and give them debit voucher which just like a cheque . They will
cash that on that day and payment will be maid through NBP general account.

Cash finance

In this mode of financing the borrower is allowed to make withdrawals of

funds as he requires, but the total amount outstanding cannot exceed the limit
sanctioned. The mark-up/interest is calculated on the amount outstanding on his

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account. The calculation of mark-up/interest is based on the number of days a specific

amount is withdrawn. This loan is given against the hypothecation of stock. It means
lien on the stock is of bank but the custody of stock in the hand of customer. This type
of loan is called small and median enterprise loan (SME). This type of loan can be
issued up to 100M.

Loan account:
In this account bank will credit the amount of loan and the
borrower can get the cash from this account but after using this loan when he receive
the profit on sale proceed of business he must have to deposit in this account and cash
receipt must show to credit department where they enter this in the books of record.
Maximum no. of transactions will show the max. credibility of the business. If there is
low or no transaction is these account this will show the low credibility and less
business activity and in any audit objection can arise on this loan. Then the bank will
check the business and find out the reason of low transaction.

Markup account:

In this account the borrower will submit the markup according to the agreement. If it
on quarterly basis or half yearly he will have to pay on the specified date. Markup will
be take on the amount that the borrower have taken form the loan account. It will not
be taken on the whole sanction loan. Markup will be set on daily basis.

Documentation:
1. BBFS ( borrower's basic fact sheet):
All details of the borrower's about his business, nature of business, business
operations, business management, corporate status, details of directors & owners,
loans taken from others banks, balance sheet, income statement etc…
2. LAF (loan application form)
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3. CIB (Credit information beuro) Report:

This is the information of others loan taken by the borrower form other
financial institutions which is send by the state bank on request of NBP.
4. ICIL ( international credit information limited)
This is a local credit report in which detail information about the market
situation, credibility of the borrower and other information regarding the business
stability and worthiness of borrower.
5. Title Clearance:
It is a legal opinion on the document of pledge property (given by borrower)
by the legal adviser of bank before pledged.
6. Latest balance sheet:
Latest balance sheet of the borrowers business.
7. Markup recovered :
This is for the borrowers who want to revise their loan. First,
they must have to pay their previous markup then they can apply for the revision.
8. Last audit/ report:
If audit report object any case or any document then credit
department have to give satisfactory reply and attach the relating document the case.
9. Valuation report:
Valuation report of the property. This valuation is done by the
third party. This gives us the clear fore sale value.
10. BM (Branch manager) certificate on acceptance of valuation
report.
11. Compliance certificate :
This document is attached at the end of documentation. It is a
legal opinion on all documents present in the case by the legal advisor of NBP.
12. Fard/PT-1
Showing bank's charge/lien on the mortgage property.
13. Documents completion certificate form BLA
14. Stock statements Physical verification of hypothecated stocks.
15. Business premises:

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Means the business premises is on lease or on the name of

businessman.
16. CNIC
Risk rating:
On the bases of this documentation credit department make
judgment about the risk of loan. If maximum score is above 60 then the loan will be
recommended for sanction. Means if in the light of these documentation credit
department think that there loan is 61 % secure then they will recommend.

Maximum score Rating

61-70 4
71-80 3
81-90 2
91-100 1

Staff loan
Employees of NBP can also take three type of loan. Employees have advantage of
low interest rate of only 4%. Employees can avail the following loan facalities.
⇒ Motor Car/ Cycle finance
⇒ Computer finance
⇒ House building

Documentation:
⇒ Standard application form
⇒ Approved building plan (in case of building)
⇒ Employee profile form
⇒ CNIC
⇒ Driving license (in case of motor finance)
Seller Quotation

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⇒ Statement of outstanding loans

⇒ Salary slip
⇒ Non-involvement certificate
⇒ IB-12 Demand Promissory note
⇒ IB-16 Agreement for finance
⇒ Mortgage Deed IB-22
⇒ Letter of hypothecation (in case of motor car)
⇒ Authority letter for recovery of legal and other charges

Running Finance/ Corporate Finance:

To assist a large-scale business operator to carry on his day to day requirements of
liquid funds, this account is opened is made operation in his favor. Running finance is
provided where the amount goes beyond 100M. The mark-up/interest is calculated the
same way as in case of cash finance.
Security against running finance is that which is easily convertible in to cash.

Non-Fund:
Bank provide non fund advance in form of Guarantee.

Guarantee:
A guarantee is a promise between one person to another person or party to
answerable for the debt of a third party. Bank issues guarantee after 100%cash
collaterals are provided by the person.

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Advances

Advances are small loan or we called retail product of loan. These loans can be
sanction up to limit of 75M. This financing is maintained or operated through a
software CAMS (consumer asset management system). In this branch two retail
products are available.
♦ Advance salary
♦ House building finance (SAIBAN)
We can also say it consumer financing.

NBP Advance salary:

This facility of available for Federal Govt. employees, provincial Govt. employees,
Autonomous Bodies (whose salary is giver through NBP) Local Bodies employees
and Semi Govt. intuitions employees. Debt burden is 50:50 means if his installment
(which is set through a computer programmed formula) is exceeds his half take home
salary, and then he can not get the loan. The maximum no. of installments is of 60
months.
Documentation:
♦ Three months salary slips of employee
♦ CNIC of employee
♦ Two references of work colleagues. One reference form same
grade (1-CNIC 1-salary slip). Second reference is from officer grade (1-CINC,
1-salary slip).
♦ Three blank cheques signed by employer.
♦ Employer undertaking (SDO, DDO) employer will give
undertaking that if any changes in salary payment account, transfer of
employee, retirement of employee, death of employee or any other changes

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related to the mode of payment of salary of employee, he will inform the bank
immediately.
♦ LAF (loan application form).

Remittances
Transfer services from one bank to other bank through different instruments.
Modes of remittance/ instrument of remittance
♦ Mail transfer (MT)
♦ Telegraphic transfer (TT)
♦ Demand draft (DD)
♦ Govt. Draft (GD)
♦ Electronic transfer (ET)
♦ Payment order
Telegraphic Transfer:

In TT, a person fill TT application form and pay the transfer

amount and service charges at cash counter. Then he will submit this form in
remittance. At first stage, this will enter in the book keeping records then a specific
coded message is prepared by remittance officer. After that remittance officer send
this coded message through telephone to the receiver bank. On the other hand the
receiving officer decodes the message and detail and then credit the account which is
mention in the coded message. After sending the message telephonically, form will be
the given to the computer operator. He will punch all the TT's in computer. At the day
end balance of the book keeper, casher and computer operator should be matched.
After that the bank will send a TT confirmation F-125 (To confirm that balance is
correctly credited to the corresponding account). In response of this confirmation they
will send TT confirmation F-128.

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Mail Transfer:
MT may be online or off line. In MT, a person fill MT
application form and pay the transfer amount and service charges at cash counter.
Then he will submit this form in remittance. This will enter in the book keeping
records then remittance officer prepare a draft in the name of specified person which
mention in the form. Then, if it is off line it will be send through mail or corer
services. If it is online then a message will be sent through fax to the receiving bank
and at end of day send authority will send a MT confirmation to that bank.
Demand Draft:
It is an instrument, which is payable on demand and it is only presentable in
the city/country. When any draft, i.e., an order to pay money, drawn by an office of
bank upon another office of the same bank for a sum of money payable to order on
demand, purports to be issued by or on behalf of the payee, the bank is discharged by
the payment in due course.
When a person requires a draft, he should be asked to complete the prescribed
application form in which he should state the amount of the draft, the name of the
payee, and the place of payment. The bank charges 3% withholding tax and
commission. In DD, a person fill DD application form and pay the transfer amount
and service charges at cash counter. Then he will submit this form in remittance. This
will enter in the book keeping records then remittance officer prepare a demand draft
and give to the customer.
Pay Order:
It is an instrument, which is payable in demand and only presentable in city.
Pay order is also called the banker’s cheque drawn upon the issuing bank itself.
It is not negotiable and therefore, bankers tend to cross the instrument “Payee’s
account only” to avoid the possibility of dealing with instruments with forged
endorsement. The pay order is issued favoring individuals, commercial concerns, and
government departments. On the presentation of pay order, the bank is liable to pay
the amount to the customer. Bank charges excise duty and service charges. Procedure
of preparation of pay order is same as of others instruments.
Govt. Draft:

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Govt. draft and demand draft are almost same the only difference is, it can only be
issued and drawn on Govt. institutions.
Electronic Transfer (ET):
In electronic transfer a message of money transfer is send through virtual private
network. Procedure similar to the procedure of TT.

CLEARING

Meaning of Clearing:

The word clearing has been derived from the word “Clear” and is defined as “a system by which banks
exchange cheques and other negotiable instruments draw on each other within a specified area and thereby
secure payment for their client through the clearing house at specified time” in an efficient way.

Advantages of Clearing:

1. Since clearing does not involve any cash etc and the entire transaction take place through
book entries, the number of transactions can be unlimited.

2. No cash is needed as such the risks of robbery, embezzlements and pilferage is totally
eliminated.

3. As major payments are made through clearing, the banks can manage cash payment at the
counters with a minimum amount of cash in vaults.

4. A lot of time, cost and labor are saved.

5. Since it provides an extra service to the customers of banks without any service charger
or costs, more and more people are inclined and attracted towards banking.

NIFT:
NIFT stands for National Institutional facilitation Technologies. Clearing House
of SBP has shifted a tiresome part of its work to a private institution named NIFT.

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NIFT collects cheques, demand drafts, Pat orders, Travelers Cheques, etc. from all
the branches of different banks within city through its carriers and send them to
the branches on which these are drawn for clearing. After the branches approve
the instruments drawn on them, NIFT prepares a sheet for each branch showing
the number for instruments and amount in its favor and drawn on it and sends it to
each branch. A similar sheet for each bank is also sent to clearing house of SBP
where accounts of banks are settled in the same manner.
The instruments are collected from the client. Following things are checked.
• Cheque date (a cheque is valid for six months and it should not be post
dated).
• Title
• Amount in figures and words should be same
• There should be no cutting and overwriting on the cheque.
• Deposit should also match with the cheque.

Stamping Procedure:
In stamping procedure, the following three stamps are used.
If the cheques is for the same bank, and drawer and the payee both have the account
in the same bank, the simple bank stamp is used, and this stamp indicates the transfer
of cheques from one account to another account. This cheque is directly moves
towards posting in computer terminal where the computer operator debit one account
and credit the account of another party. This stamp is known as the Transfer stamp.
If the cheques are received from other bank and drawer’s account is not in the bank
then cheques received stamp is used. This cheque is represented in the clearing house,
date is also mentioned on the stamp.
If the cheques is from out of the city then it is send for the collection.

Stamping On Cheques:
After receiving the cheques and issuance of the deposit slips to the client, stamping
process starts on the cheques, the following stamps can be used.

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a) The name and branch name of the bank stamp is used on the front side
of the cheques. This stamp is used on all types of cheques. This stamp is
known as crossing stamp.
b) The second stamp used is the clearing stamp on the front side of the
cheques. It also indicates the presenting date of the cheques. If the cheques
is dishonored and deposited again for clearing, the clearing stamp is used
again with new date of presenting. So the clearing stamp is necessary
wherever the cheques are presented for clearing.
c) The third necessary stamp which is the endorsement indicates the
paying bank to “payees account credited”. It is the confirmation of
outward clearing.

The whole clearing process requires about 2 days, after 2 days the customers’ account
is credited and the customer can make the transactions.

Procedure of clearing:

Presume that NBP got the cheques which are drawn on HBL, UBL and MCB for amounts Rs. 50,000/-, Rs.

15,000/- respectively, its total being amounts Rs.95,000/-, it means that this amount is to be credited to NBP

general A/C with S.B.P. on the other hand the cheques drawn on NBP are from HBL, UBL and MCB of

Rs.15,000/-, Rs.75,000/- and Rs.30,000/- respectively, its total being Rs.1,20,000/-, it means that this amount is

to be debited from NBP general account. The difference between Rs.95,000/- credit and debit Rs.1,20,000/-

debit is Rs.25,000/- debit which means the NBP general account will be debited for Rs.25,000/-.

If we separately show it as

1. NBP has t receive Rs.50,000/- from HBL and to pay Rs.15,000/- to HBL so difference is
Rs.35,000/- credit.

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2. NBP has to receive Rs.30,000/- from UBL and to pay Rs.75,000/- to UBL so difference is
Rs.45,000/- debit.

3. NBP has to receive from MCB Rs.15,000/- and to pay Rs.30,000/- to MCB so difference
is Rs.15,000/- debit.

GRAND TOTAL:

35000-45000-15000 = -25000

i.e. Rs.25000 debit.

Hence NBP general A/C with State Bank of Pakistan will be debited with Rs.25,000/- and the contra will be
other banks accounts respectively. This called as “Debit and Credit Rule”.

Outward Clearing at the Branch:

The following points are to be taken into consideration while an instrument is accepted at the counter to be

presented in outward clearing:

1. The name of the branch appears on its face where it is drawn on

2. It should not be stale or post dated or without date

3. Amount in words and figures does not differ

4. Signature of the drawer appears on the face of instrument

5. Instruments is not mutilated

6. There should be no material alteration if so, it should be properly authenticated

7. If order instrument, suitably endorsed and last endorsee’s account being credited

8. Endorsement is in accordance with the crossings if any

9. The amount of the instrument is same as mentioned on the paying-in-slip and fanfold.

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10. The title of account on the paying-in-slip is that of payee or endorsee (with the exception
of bearer cheque).

If an instrument is in order then out bank’s special crossing stamp is affixed across the face of the
instrument. The instrument is suitably discharged, where a bearer cheque does not required any
discharge and also an instrument in favor of a bank need not be discharged. The instrument along with
paying-in-slip is retained while the deposit receipt is given to the customer duly signed. Then the
following steps are to be taken:-

1. The particulars of the instruments and the pay-in-slip or credit vouchers are
entered in the Outward Clearing Register.

2. Serial number is given to each voucher

3. The register is balanced.

Inward Clearing of the Branch:

1. The particulars of the instruments are compared with the list

2. The instruments are detached and sort out department wise

3. The entry is made in the Inward Clearing Register (serial number, instrument number,
account number, amount of the instrument is written).

4. The instruments are sent to the respective departments against acknowledgement in the
Inward Clearing Register.

5. The instruments are scrutinized in each respect before honoring the same

Govt. Section
Collection of all Govt. revenues and payments in shape of pension and assignment
account. (Govt. expense paid by NBP.)
Provincial account (P1):
1. Miscellaneous
2. Property tax
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3. Motor vehicles
4. P D (refundable amount)
5. Revenue (Water tax)
6. Traffic Chelan
7. Stamp duty
8. Agricultural tax
District Govt.
Provincial Govt. (P2):
Food department
Central Govt. (C1):
1. Domicile (all the other miscellaneous)
2. Visa protection
3. Weapon license
4. Passport fee
F.B.R:
1. Income tax
2. Sales tax
3. Federal excise duty
4. Custom

SWOT ANALYSIS

STRENGTHS:
 NBP one of the largest financial institutions of Pakistan with eight
million of customer base NBP holds 24.6% share of time and demand deposits
in the country. Local currency deposits comprise 67% of bank's total deposits
while foreign currency deposits account for the rest.
 NBP has an extensive domestic branch network of 1200 (according to
the latest data) branches located all over Pakistan. The Bank also has a
presence in 19 international locations including the USA, United Kingdom,
Europe and the Far East.
 NBP's total assets stood at Pak Rs.370 billion on December 2000. This
included total earning assets of about Pak Rs.268 billion with gross loan
portfolio of Pak Rs.140 billion. The bank also has an investment portfolio of
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Pak Rs.91 billion, which comprises treasury securities, corporate bonds, shares
and other securities.
 NBP cash provision as percentage of non performing loans equal to
60% this coverage factor for the non performing loans is the highest amongst
the nationalized commercial bank.
 NBP is working as right arm government of Pakistan as it is
responsible for all claims of government for recovery as well as payment. All
depositor of NBP are in relief that their money security is guaranteed by
government of Pakistan.
It acts as an agent of the Central Bank wherever the State Bank does not have
its own Branch.

WEAKNESSES:

 NBP staff especially at lower considers their work as burden. They

usually waste time in other task a part in performing their duty. Using
government property for there own need. They are reluctant to accept change
brought by latest restructuring efforts.
 The general out look and interior layout of branches are not as required
according to modern banking
 NBP bearing up large burden in running those branches, which are not
producing any income but keep on adding expenditure.
 NBP is relying on its traditional sources of income it has not taken
benefit from innovation in banking like introducing retail banking or consumer
banking and using any type of scheme to generate more deposits and
producing more advances. Further, more don’t even continue its credit card
due mismanagement and lack of control.
 NBP is far behind in offering modern banking facility like automated
teller machines then other commercial bank in Pakistan as only eighteen
branches in all over country have this facility.
 NBP has only forty-four on line branches. While from remaining
branches data gathering is time consuming, and not fool proof. Quantum of
settlement within different branches is pending because of this updating daily
record is becoming very difficult.
 Customers have to fallow long lengthy procedure for opening of
account as well applying for debt. Which discourage most of the people to
invest in NBP.
 In NBP, most of the time merit not has importance in hiring of
employees. Such practices are black spot on the face of bank and resulted big
losses and fraudulent acts by NBP own employees.

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OPPORTUNITIES:

 Reorganizing efforts going on in the NBP has open many

opportunities for NBP to grow. NBP current management has boarder
vision. They have taken steps to improve customer services, streamline
internal procedure and creating a delectating climate for technology
initiative.
 To achieve above mention objective they have created
operation group:
 Starting of the retail banking initial working. Setting of target
for of making at least 300 branches country wide on line.
 Closing of all those branches, which are burden on NBP.
Management to offer specialized services to major corporate including
advisory and debt syndication introduces the concept of relationship
manager.
 Comprehensive training programs has been develop to up grade
the core banking skills of the existing staff as well as integrate high
quality hiring.
 To improve the motivation of staff a merit-based culture is
being promoted. Through overhauling the manpower recruitment
preservation and performance appraisal system.
 These actions taken by current management provide a great
opportunity for NBP for making it future prosper and can make NBP not
less than any modern commercialize bank in Pakistan.

THREATS:

 Major threats NBP facing is from its competitor especially from

denationalized commercial bank. In which MCB is on the top of the list, The
Bank provides 24 hour banking convenience with the largest ATM network in
Pakistan covering 15 cities with over 100 ATM locations.
 Retail banking and consumer banking resulting in the products such as
credit cards, housing finance and automobile finance lending to small
individual consumers, and purchases of automobiles, housing, and consumer
goods are generally made on a cash basis. These are causing another threat, if
not counter will result in significance loss of customers
 Recently banks and other financial institutions have introduced
innovative schemes to attract deposits, like gift checque scheme by MCB.
These schemes offer prizes on short and long term fixed deposits, through
lucky draws.
 Now banks are using technology which covers the distance no matter
how far away any one, through a satellite based, on-line real-time banking
system and by offering telephone banking, electronic funds transfer, E-
Banking and other modern facilities.
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SUGGESTIONS:

 NBP major fault is that wasn’t keeping its pace with on going
changing in banking industry unlike other bank. Now this bank combining all
it power and trying to approach other banks.
 Latest reorganizing efforts are necessary to make it cost effective also
making its facility accordingly to modern banking. These must continue.
 Bank management has to put its all effort to change the prevailing
culture of the bank and to put the foundation stone of business oriented
culture. In which employees give important to the bank and its customer.
 To attract the customer in the future NBP have to make extensive
effort to give facilities of retail and consumer banking. Plus the technology in
the banking which will be necessary for future banking is another week area
need to be stressed.
 The outlook and interior lay out of the branches is another thing which
needs to be improved.
 The procedure of taking services from the bank must be made easier
and straight forward not involving long difficult procedure for simple task.
 To remain in the market bank need to be vigilant in the eyes of
customer. One way is through promotion efforts, so that people aware about
he services of the banking and any addition which the bank as made in the
portfolio of its services.

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